MTA All Presidents Meeting GIC Plan Overview

1. MTA All Presidents MeetingGIC Plan Overview January 8, 2011 John Brouder Partner Boston Benefit Partners, LLC Version 5.0 1.8.11

2. GIC Governance Overview and Structure • GIC covers 350,000 active employees, retirees and dependents (total members) • Governed by 15 Commissioners • AFSCME, NAGE, SEIU, MTA represented + 1 retiree • Balance of Commissioners are non-union • MMA has one Commissioner • Executive Director is Dolores Mitchell • GIC staff manage all benefit programs • RFP, Cost/Quality data, enrollment, communications • State Employees/Retirees are offered additional benefits (dental, life/AD&D, LTD, FSA) • Municipal Employees/Retirees are only offered medical

3. General Benchmarking Data Note: Benchmarking data from Kaiser Annual Employer Health Benefits Survey

4. MTA All Presidents Meeting GIC Overview

5. GIC Challenges (…Also Facing All Employers) • State budget outlook continues to be bleak • $3 billion structural state budget deficit projected for 2011 • Health care costs continue to skyrocket • Rising hospital, physician, and other provider costs • 10 Massachusetts hospitals get 10-100% higher payments than the other 55 hospitals within the state • Increases in utilization of services • No national solution Note: Information provided from 2010-2011 GIC Benefit Decision Guide, and the January 29, 2010 Attorney General’s preliminary report “Investigation of Health Care Cost Drivers.”

6. GIC Strategy • Control health insurance increases • Clinical Performance Initiative (CPI) (2004) • Tier physicians and hospitals according to nationally recognized measures of quality and/or cost-efficiency • Control utilization by increasing copays by $5 and implementing calendar year deductibles (FY2010) • Add 2 new HMO plans that use a narrower network • HPHC Primary Choice • Tufts Health Plan Spirit

7. MTA All Presidents Meeting GIC Plan Provisions

8. GIC Health Insurance Plan Provisions • GIC offers multiple plan options for active employees, and retired non-Medicare participants • Active employee and non-Medicare retiree plans include “tiered” copays for doctors and hospitals • Non-Medicare plans include “up-front” calendar year deductibles and hospital copays • Medicare-eligible retirees also have multiple plan options • Fallon, HPHC, HNE, Tufts and UniCare • Health Reimbursement Accounts (HRAs) will not be allowed 7.1.11

9. GIC Health Insurance Plans Active Employees and Non-Medicare Eligible Retirees

10. GIC Health Insurance Plans 2009 Enrollment To date, 80% of municipal employees and retirees have enrolled in a GIC PPO option

11. MTA All Presidents GIC Rates and Plan Design

12. GIC Rate Illustration for Members .

13. GIC Sample Plan Design - HPHC

14. GIC – Sample HPHC Independence Plan Hospital Tiers

15. GIC Sample Plan Design – Tufts Health Plan

16. GIC – Sample TUFTS Navigator Plan Hospital Tiers

17. GIC Explanation of Calendar Year Deductibles • The member pays a stated amount up-front, before certain health insurance benefits are paid by the health plan • Individual: An individual has a $250 deductible before some benefits begin • Two person family: Each person must satisfy a $250 deductible before some benefits begin • Three or more person family: The maximum each person must satisfy is $250 until the family as a whole reaches the $750 maximum in deductible payments before some benefits begin • Not all benefits are subject to the deductible

18. What Applies to the Deductible

19. An Example of How a Calendar Year Deductible Works

20. MTA All Presidents Meeting Summary

21. Summary of the GIC Option • GIC is a large purchasing pool that controls cost through plan design, including provider networks • GIC must live within state budget • Employees and retirees are provided a wide selection of options • Deductible plans are not common today at the municipal level, but are common with other large employers • HRAs would allow municipalities to maintain a higher level of benefits for their employees

22. Future Considerations • Allowing municipalities to offer HRAs to employees at the local level • Adjust governance structure of GIC • Contribution splits to be negotiated at the municipal level • Impact of state budget on GIC plan structure

23. GIC Plan Overview QUESTIONS & ANSWERS